Singapore Exchange Limited (SGX) announced today that it has successfully completed industry-wide testing of Extended Settlement (ES) contracts, and rescheduled the launch of the product from 23 January 2009 to 20 February 20091.
The Exchange and its Members will focus on training and investor education for another month until its launch.
"Extended Settlement contracts will be the first margin-based product in our securities trading market. It is important to the industry, and the training and education programmes will equip brokers, trading representatives and their clients with the necessary knowledge to understand and benefit from the product. We appreciate the efforts from all parties that have enabled the successful industry-wide testing, and we will now work with them to focus on training and investor education," said Mr Chew Sutat, SGX Executive Vice President & Head of Market Development.
"It is important that we allow enough time for the investing public to get to know what Extended Settlement contracts are, and how the product can work for them. We support the revised launch date," said Mr Lim Eng Hai, Chief Executive Officer of the Securities Association of Singapore.
ES contracts will be a new product class on the SGX Securities Trading (SGX-ST) market. Its launch is aimed at expanding the current suite of equity products available to investors. The new product allows investors to buy into an underlying stock listed on SGX at the transacted price on the day of the trade, for settlement at a specified future date.
Investors will have to put up an initial margin to trade ES contracts, which will be marked to market. ES contracts provide investors with an exchange-listed and -traded alternative to unregulated over-the-counter trades.
To familiarise investors with the benefits and risks of trading the new product, SGX continues to work with its Member firms on investor education programmes. Among various activities, participating brokers organise product education seminars in collaboration with SGX at venues such as the SGX auditorium in Shenton Way.
The 10 stockbroking companies supporting the development and launch of ES contracts are AmFraser Securities, CIMB-GK Securities, DBS Vickers Securities, DMG & Partners Securities, Kim Eng Securities, Lim & Tan Securities, OCBC Securities, Phillip Securities, UOB Kay Hian and Westcomb Securities.